Google searches for right note in online music business

SAN FRANCISCO (Reuters) - Google Inc is planning new and revamped streaming-music services in coming weeks, searching for a way to stand out in an increasingly crowded field of rivals from Apple Inc and Amazon.com Inc to Spotify.

Nailing music is one way for Google to raise chances of continued success as people spend more time on mobile devices.

Google's YouTube service has become a low-profile titan in streaming through the popularity of music videos. Currently, videos must be chosen one track at a time. YouTube in coming weeks will launch new subscription and ad-supported YouTube music services able to play several tracks in a row, a person familiar with the plans said.

Google had been expected to launch the YouTube services by the end of summer and had offered few details.

Also coming soon: an update of Google's existing $10-a-month All Access subscription-music streaming service. The new version will incorporate technology acquired by Google with the purchase of Songza, a service known for its ability to recommend music, Jamie Rosenberg, Google's Vice President of Digital Content, said in an interview.

The variety of approaches risks confusing consumers, said Alex Luke, a venture capitalist at The Valley Fund, who has worked as an executive at music label EMI Music and was the director of music programming at Apple until 2011.

He argued that the winners in digital music would offer radio-style programs, downloads and let listeners put together their own playlists. (For a graphic of music sales see: http://link.reuters.com/fap92w)

“The marketplace hasn’t found itself yet and you’re going to continue to see the big players like Apple and Google experiment,” Luke said. "The thing that Google and YouTube both have in their favor is these huge, active user bases."

The latest music push comes 16 months after Google launched its All Access subscription service. Industry observers say All Access has struggled to stand out and set Google into a markedly different business than the free, ad-supported services that have long underpinned its success.

Google’s All Access subscription music service likely draws between 500,000 and a few million users, said Mark Mulligan of research and consulting firm Midia Research. That puts it in the same ranks as rivals Rhapsody and Deezer, but behind Spotify, which has more than 10 million paying subscribers.

Apple has a Beats subscription streaming service, acquired with the Beats headphone line in May, and it has free iTunes radio, which analysts say has not been a breakout success. E-commerce giant Amazon launched its music service in June, providing streaming of a limited catalog of music to members of its $99-a-year Prime service.

The U.S. music market is worth $7 billion but royalty and marketing expenditures mean most streaming music businesses currently lose money, according to estimates from Brian Zisk, executive producer of the SF MusicTech Summit.

Mulligan described Google's music service in a "holding pattern", arguing that Google should be at least as big as Spotify given Google's resources and existing user base.

Google’s Rosenberg acknowledged the service is not the market leader, but said Google was encouraged by what he called a "very healthy" portion of consumers who subscribed after a free one-month trial.

He saw no need to cut the $10 monthly subscription price.

“Is the bigger upside getting more people to try these services, or is the bigger upside dropping the price by a dollar or two?" he asked. "Right now we’re focused on creating broad awareness that the service exists." All Access is now available in 43 countries, he said.

To stand out, Google envisions a service "that extends seamlessly to your wearable device or to your car," and that's intelligent enough to play "the right music for the right moment," Rosenberg says.

Marc Ruxin, the Chief Operating Officer of Rdio, a competing, privately-held streaming service, said Google wanted to use music to keep its main service, search, top of mind.

“Google like any Internet company is in a war for attention, so they want as much user time on a daily basis that they can get,” he said.